Q: The last few years have been frenetic setting up my own business. There have been a lot of long hours and stress. Now I’ve got my business to the point where it’s doing quite well, and I’d like to take a step back from the company and appoint a managing director.
In order to do this, I need someone to take on a large part of my role. I’ve identified a potential candidate among my staff, but I worry that choosing not to bring in someone from outside the company is a mistake. Are there any benefits to bringing in someone from outside?
A: Deciding to take a step back from your business can be a difficult decision, so it’s understandable that you want to make sure that you’re handing over the reins to someone capable.
There are pluses to bringing new blood into an organisation. They can bring different skillsets to the table, which can be extra important if you’re looking to expand the scope of your business or move into new markets. A fresh perspective can do wonders for a business, as the right candidate can see areas for improvement that are easier for an outsider to pinpoint.
But there are downsides to external hires. Looking outside of the company can damage morale, especially in small companies. Recruiting externally can be an expensive undertaking. Training an outsider is going to take longer than training an individual who has a working knowledge of your business. Also, with all external hires there is the risk that the candidate will not fit within the company structure, or that they won’t like the company.
If you can promote from within it can lead to a better working atmosphere within the company, which can have a positive effect on productivity. Existing staff already know the ropes, so you don’t need to spend as much time training them in. There are other potential financial benefits. In-house staff may be happy with a salary raise, which may not be as high as the salary you may have to offer an external candidate. Promotion from within can help foster a good atmosphere, giving staff the message that hard work is rewarded with career advancement.
External candidates are excellent when looking to expand your business, but the motivation behind this promotion/hire is for you to take a step back from the business. In those circumstances it seems like an in-house promotion would be the most straight-forward option, particularly as you’ve identified a potential candidate from your existing staff. It is important, however, to make sure that you are evaluating their skills correctly. A diligent worker does not necessarily make a good managing director, and it’s worth making a list of the key skills involved in the role and trying to see how their competencies measure up. If there is nobody in your business with the requisite skillset, then the obvious next step is to look outside the company.